Hastings utilities staff presented preliminary options to the City Council for sharing the upfront costs of electric line extensions with developers and for moving existing utility payments-in-lieu-of-taxes (pilot) into a separate city dividend fee on utility bills.

"Right now, it takes about 20 years for us to get a payback from that site if they maintain being an average customer and they stay for 20 years," said a utilities staff member, summarizing current line-extension economics for residential lots and showing how modest developer contributions could shorten municipal payback periods. Staff described sample cost-share tiers (for example, 10–25% developer contributions on average-lot infrastructure) and proposed drafting formal policy language after council feedback.

On commercial projects and larger power users, staff recommended a case-by-case negotiated approach that would calculate an ‘‘allowable investment limit’’ based on projected utility revenues (for example, two years of gross revenue) and credit that amount against capital costs the utility would otherwise absorb. For very large users, staff said a tailored payback analysis would be prepared and returned to council for approval.

Council members and staff also discussed the utility pilot — a percentage transfer from the utilities into city funds that had been set by past ordinances and temporarily adjusted by a prior resolution. Staff proposed moving the pilot out of embedded rates and into a separate dividend fee shown on customer bills; the dividend would be a city-set fee (separate for electric, water and gas) that could be adjusted by council without changing utility rate structures. Staff said moving to a dividend would increase transparency and give the council last-minute flexibility during the budget process.

"If council is good with it, then we will proceed to put a budget together with this," the utilities presenter said. Staff also said they will present a final consultant report and proposed ordinance or fee schedule to the utility advisory board and then return to council for formal action in the coming months. No council vote was taken at the work session.

What happens next: utilities staff will finalize a consultant report, present options to the Utility Advisory Board, and return to council with recommended percentages or policy language for a line-extension cost-share and a city dividend fee for the pilot transfers.